Four Things the Slack-Atlassian Deal Says about the Workplace Collaboration Market

Earlier this month, the users of Australian-based software company Atlassian received a system-generated email notifying them that its HipChat and Stride instant messaging and chat platform will be migrating to Slack. This is a result of an agreement between the two companies announced in late July in which Slack acquired Atlassian’s chat and messaging solutions. This deal can be viewed as Atlassian’s withdrawal from the fiercely competitive team-collaboration software market.

Both Slack and Atlassian are rated as “Leaders” in the social-centric collaboration quadrant in the ISG Provider LensTM report released in June. In fact, Atlassian is rated very strongly compared to Slack on the “Competitive Strength” axis. This is because a solution’s strength in social-centric collaboration is defined by its ability to offer standalone instant chat and messaging. A solution’s strength depends, to a large extent, on the number and variety of integrations it can support to make end users more productive and collaborative.

Atlassian’s HipChat product, which transformed into Stride last September, didn’t become popular in the standalone chat and messaging space. However, the true value of Atlassian- Slack collaboration is in the extended solution ecosystem the company offers. Atlassian has well-established bug tracking, knowledge management and code collaboration solutions, especially for agile and DevOps application teams. Agile software developers have been using Atlassian’s products Jira, Confluence and BitBucket for quite some time now. HipChat, which later became Stride, proved to be a popular tool for users already familiar with Atlassian’s other products.

The market for team collaboration, or more specifically social-centric collaboration, has been heating up over the last two years with new and established players joining in. Atlassian’s Stride was not as well received as its other products and that can be a reason for the company to let it go.

The recent deal between Atlassian and Slack impacts the enterprise social collaboration market in many ways. Here are some of the main ones:

First, it points to market consolidation with fewer leading players and strong offerings. ISG’s Provider Lens report identified Slack, Microsoft, Jive, Atlassian and Google as “Leaders” in this space. While Microsoft and Google are leading with their own office productivity suites, Jive has been struggling with frequent changes and acquisitions. The Slack-Atlassian deal benefits Slack by bolstering its position in social-centric collaboration. Slack is among the earliest disruptors with its team-focused collaboration and bot-focused innovative approach. By aligning with Atlassian, Slack has removed a competitor with a strong product ecosystem so that it now faces fewer competitors.

Second, the deal signals Slack’s increasing interest in large enterprises. Atlassian had a land-and-expand strategy, in which early users adopt the software and propagate its use. Because Atlassian’s products already integrated with Slack, this agreement strengthens Slack’s offering, which has been having trouble penetrating large enterprises because it is perceived as a SMB solution. Slack’s integration with Atlassian products could be a highly attractive package for large enterprises. Atlassian acquired the Trello project management solution last year, which will help Slack serve agile application development projects and project management teams.

Third, competition is building against Microsoft Teams. Slack once mocked Microsoft when it entered the team collaboration space, but recently Microsoft has taken significant steps to improve its Teams team-collaboration software. It recently increased the integrations it can support and introduced a free version, which gives serious competition to Slack. Teams naturally integrates with Office 365, Microsoft’s popular office productivity and collaboration solution. Neither Atlassian nor Slack integrate with Office 365 directly but support Google’s G-Suite. The combined offering from Slack and Atlassian can benefit enterprises with non-Microsoft and heterogeneous environments.

Fourth, it indicates vendors are strengthening what they do best. Social-centric collaboration players are acquiring firms and divesting capabilities to focus on their core strengths and enhance existing portfolios. It is a very dynamic market and solution vendors are trying to specialize in what they do best or fill solution gaps instead of copying competitor’s functionality. Workplace by Facebook, identified as a “Rising Star” in the Provider Lens Quadrant Report, acquired Redkix, a provider of email and calendar functionality. Meanwhile, Cisco, identified as a “Product Challenger” in the Quadrant Report, acquired Accompany, which provides AI-enabled information search that can enhance its Webex offering. Cisco has already rebranded its Spark collaboration solution as Cisco Webex Teams, building on its strength and brand in collaborative meeting solutions.

With rapid acquisitions and divestures, end users are often left with unexpected changes in the way they collaborate. For example, users and teams that were already collaborating over HipChat or Stride could have migrated to Slack if they wanted, but when a merger or acquisition happens, users are forced to migrate to another solution they may or may not like and may even be forced to choose a competitor’s solution. Vendors undergoing a merger or acquisition face the risk of losing their existing user base but may also gain new users based on enhanced functionality.

The social collaboration market is defined and influenced by dynamic user behavior and user interaction with one another. Therefore, the consolidation and inorganic growth happening in this market may continue apace or even significantly increase in the coming days and months.

Mrinal Rai is the Lead analyst for Digital Workplace and Social business collaboration. His area of expertise is digital workplace services and enterprise social collaboration both from a technology and business point of view. He covers key areas around the Workplace and End User computing domain viz., modernizing workplace, Enterprise mobility, BYOD, VDI, managed workplace services, service desk and modernizing IT architecture. In Social business collaboration, he focuses on enterprise social software, content collaboration, team collaboration, social media management and chatbot platforms. He has been with ISG for last 5+ years and has more than 10 years of industry experience. Mrinal works with ISG advisors and clients in engagements related to workplace modernization, social intranet, collaborative workplace, cloud-based VDI, end user computing and service desk.